Nava vs.
Peers Marketing WON officers of Peers Marketing Corporation can be compelled by
Facts:
Teofilo Po, as an incorporator, subscribed to 80 shares of Peers Marketing
Corporation at P120 per share or a total par value of P8,000.00. Po paid
P2,000.00 or 25% of the amount of his subscription. No certificate of stock
was issued to him or, for that matter, to any incorporator, subscriber or
stockholder.
Later, Po sold to Ricardo A. Nava, 20 of his 80 shares for P2,000.00. In the
deed of sale, Po represented that he was the absolute and registered owner
of 20 shares of Peers Marketing Corporation.
Nava requested the officers of the corporation to register the sale in the
books of the corporation. The request was denied because Po has not paid
fully the amount of his subscription. Nava was informed that Po was
delinquent in the payment of the balance due on his subscription and that
the corporation had a claim on his entire subscription of 80 shares which
included the20 shares that had been sold to Nava.
Nava then filed a mandamus action in the CFI to compel the corporation and
Renato R. Cusi and Amparo Cusi, its executive vice-president and secretary,
respectively, to register the said 20 shares in Nava's name in the
corporation's transfer book. The respondents in their answer pleaded the
defense that no shares of stock against which the corporation holds an
unpaid claim are transferable in the books of the corporation.
CFI dismissed the case and applied the ruling in Fua Cun vs. Summers and
China Banking Corporation which states that that payment of one-half of
the subscription does not entitle the subscriber to a certificate of stock for
one-half of the number of shares subscribed.
Issue:
mandamus to enter in its stock and transfer book the sale made by Po to
Nava.
Held:
SC held that the transfer made by Po to Nava is not the "alienation, sale, or
transfer of stock" that is supposed to be recorded in the stock and transfer
book. As a rule, the shares which may be alienated are those which are
covered by certificates of stock, as shown in the following provisions of the
Corporation Law.
SEC. 35 (now Sec. 63) The capital stock of stock corporations
shall be divided into shares for which certificates signed by
the president or the vice-president, countersigned by the
secretary or clerk and sealed with the seal of the
corporation, shall be issued in accordance with the by-laws.
Shares of stock so issued are personal property and may be
transferred by delivery of the certificate indorsed by the
owner or his attorney in fact or other person legally
authorized to make the transfer. No transfer, however, shall
be valid, except as between the, parties, until the transfer is
entered and noted upon the books of the corporation so as
to show the names of the parties to the transaction, the
date of the transfer, the number of the certificate, and the
number of shares transferred.
No share of stock against which the corporation holds any
unpaid claim shall be transferable on the books of the
corporation.
SEC. 36. (re voting trust agreement) ...
The certificates of stock so transferred shall be surrendered
and cancelled, and new certificates therefor issued to such
person or persons, or corporation, as such trustee or
 trustees, in which new certificates it shall appear that they
are issued pursuant to said agreement.
xxx xxx xxx
As prescribed in Sec. 35, shares of stock may be transferred by delivery to
the transferee of the certificate properly indorsed. Title may be vested in
the transferee by delivery of the certificate with a written assignment or
indorsement thereof. There should be compliance with the mode of transfer
prescribed by law.
The usual practice is for the stockholder to sign the form on the back of the
stock certificate. The certificate may thereafter be transferred from one
person to another. If the holder of the certificate desires to assume the legal
rights of a shareholder to enable him to vote at corporate elections and to
receive dividends, he fills up the blanks in the form by inserting his own
name as transferee. Then he delivers the certificate to the secretary of the
corporation so that the transfer may be entered in the corporation's books.
The certificate is then surrendered and a new one issued to the transferee.
That procedure cannot be followed in the instant case because the 20
shares are not covered by any certificate of stock in Po's name. Moreover,
the corporation has a claim on the said shares for the unpaid balance of Po's
subscription. A stock subscription is a subsisting liability from the time the
subscription is made. The subscriber is as much bound to pay his
subscription as he would be to pay any other debt. The right of the
corporation to demand payment is no less incontestable.
No stock certificate was issued to Po. Without stock certificate, which is the
evidence of ownership of corporate stock, the assignment of corporate
shares is effective only between the parties to the transaction.
The delivery of the stock certificate, which represents the shares to be
alienated , is essential for the protection of both the corporation and its
stockholders
A corporation cannot release an original subscriber from paying for his
shares without a valuable consideration or without the unanimous consent
of the stockholders.
Additional info:
Nava argues that under Sec. 37, a certificate of stock may be issued for
shares the par value of which have already been paid for although the entire
subscription has not been fully paid. Nava relies on Baltazar v Lingayen Gulf
Electric Power Co., Inc. where it was held that Sec. 37 "requires as a
condition before a shareholder can vote his shares that his full subscription
be paid in the case of no par value stock; and in case of stock corporation
with par value, the stockholder can vote the shares fully paid by him only,
irrespective of the unpaid delinquent shares".
There is no parallelism between this case and the Baltazar case. In Baltazar,
the stockholder, an incorporator, was the holder of a certificate of stock for
the shares the par value of which had been paid by him. The issue was
whether the said shares had voting rights although the incorporator had not
paid fully the total amount of his subscription. That is not the issue in this
case.
In the Baltazar case, it was held that where a stockholder subscribed to a
certain number of shares with par value and he made a partial payment and
was issued a certificate for the shares covered by his partial payment, he is
entitled to vote the said shares, although he has not paid the balance of his
subscription and a call or demand had been made for the payment of the
par value of the delinquent shares.